DEF 14A: Definitive proxy statements
Published on October 21, 1999
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] PRELIMINARY PROXY STATEMENT
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-B(E)(2))
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO 240.14A-11(C) OR 240.14A-12
PIZZA INN, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] NO FEE REQUIRED.
[ ] FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(1) AND 0-11.
1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES: 2)
AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED PURSUANT TO
EXCHANGE ACT RULE 0-11 (SET FOR THE AMOUNT ON WHICH THE FILING FEE IS CALCULATED
AND STATE HOW IT WAS DETERMINED):
4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
5) TOTAL FEE PAID:
[ ] FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS. [ ] CHECK
BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT RULE 0-11(A)(2)
AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS PAID PREVIOUSLY.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM OR
SCHEDULE AND THE DATE OF ITS FILING.
1) AMOUNT PREVIOUSLY PAID: 2) FORM, SCHEDULE OR REGISTRATION STATEMENT
NO:
3) FILING PARTY: 4) DATE FILED:
PIZZA INN, INC.
5050 QUORUM DRIVE, SUITE 500
DALLAS, TEXAS 75240
(972) 701-9955
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 14, 1999
To our Shareholders:
The Annual Meeting of Shareholders of Pizza Inn, Inc., (the "Company") will
be held at the Company's training facility, 4819 Keller Springs Road, Addison,
Texas 75248, on Tuesday, December 14, 1999, at 10:00 a.m., Dallas time, for the
following purposes:
1. To elect three Class II directors; and
2. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only shareholders of record at the close of business on October 20, 1999 are
entitled to notice of, and to vote at, this meeting and any adjournments
thereof.
Sincerely,
Jeff Rogers
President and Chief Executive Officer
November 8, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE,
DATE, AND SIGN THE ENCLOSED PROXY, AND MAIL IT IN THE STAMPED ENVELOPE ENCLOSED
FOR YOUR CONVENIENCE. THE ENCLOSED PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS
USE.
YOUR VOTE IS IMPORTANT.
PIZZA INN, INC.
5050 QUORUM DRIVE, SUITE 500
DALLAS, TEXAS 75240
(972) 701-9955
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 14, 1999
The Board of Directors of Pizza Inn, Inc., a Missouri corporation (the
"Company"), is soliciting proxies to be voted at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held at the Company's training
facility, 4819 Keller Springs Road, Addison, Texas 75248, on Tuesday, December
14, 1999, 10:00 a.m., Dallas time, and at any adjournments thereof. This Proxy
Statement was first mailed to the Company's shareholders on or about November 8,
1999.
If the proxy is signed and returned before the Annual Meeting, it will be
voted in accordance with the directions on the proxy. A proxy may be revoked at
any time before it is voted by execution of a subsequent proxy, by signed
written notice to Pizza Inn, Inc., 40 Wall Street, New York, NY 10005, or by
voting in person at the Annual Meeting.
OUTSTANDING CAPITAL STOCK
The record date for shareholders entitled to notice of, and to vote at, the
Annual Meeting is October 20, 1999. At the close of business on that date,
there were outstanding 11,853,058 shares of Common Stock, $.01 par value
("Common Stock"). No other class of securities of the Company is entitled to
notice of, or to vote at, the Annual Meeting.
ACTION TO BE TAKEN AT THE MEETING
The accompanying proxy, unless the shareholder otherwise specifies in the
proxy, will be voted:
1. FOR the election of the three Class II director nominees named herein,
to serve for a term of two years each or until their respective successors are
elected and qualified; and
2. In the discretion of the proxy holders, as to the transaction of such
other business as may properly come before the meeting or any adjournments
thereof.
The Board of Directors is not presently aware of any other business to be
brought before the Annual Meeting.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting. In deciding all questions, a holder of Common Stock (a
"Shareholder") is entitled to one vote, in person or by proxy, for each share
held in his name on the record date. Solely with respect to the election of
directors, a Shareholder has that number of votes equal to the number of shares
held by him on the record date multiplied by the number of directors being
elected and he is entitled to cumulate his votes and cast them all for any
single nominee or to spread his votes, so cumulated, among as many nominees and
in such manner as he sees fit. Directors must be elected by a plurality of the
votes cast. To be elected as a director, a candidate must be one of the three
candidates who receive the most votes out of all votes cast at the Annual
Meeting.
A Shareholder who is present, in person or by proxy, and who withholds his
vote in the election of directors, will be counted for purposes of determining
whether a quorum exists, but the withholding of his vote will not affect the
election of directors. A Shareholder who is present, in person or by proxy, and
who abstains from voting on other proposals, will be counted for purposes of a
quorum, and the abstention will have the same effect as a vote against the
proposals. Broker non-votes will be considered shares not present and will have
no effect on the outcome of the vote. If a quorum is not present, in person or
by proxy, the meeting may adjourn from time to time until a quorum is obtained.
The enclosed proxy, if executed and returned, will be voted as directed on
the proxy or, in the absence of such direction, FOR the election of the nominees
as directors. If any other matters properly come before the meeting, the
enclosed proxy will be voted by the proxy holders in accordance with their best
judgment.
PROPOSAL ONE:
ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation and By-laws provide that
the Board of Directors shall be divided into two Classes. The terms of the
three Class II directors expire at the Annual Meeting. The Board has nominated
for election at the Annual Meeting all three incumbent Class II directors, each
to serve for a term of two years. Each nominee of the Board has expressed his
intention to serve the entire term for which election is sought. Directors will
be elected by cumulative voting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
EACH OF THE THREE NOMINEE DIRECTORS.
The following table lists the names and ages, as of October 11, 1999, of the
three nominee directors and the four directors whose terms of office will
continue after the Annual Meeting, the class to which each director has been or
will be elected, the year in which each director was first elected, and the
annual meeting (assuming that it is held in December) at which the term of each
director will expire.
EXECUTIVE OFFICERS
The following table sets forth certain information, as of October 11, 1999,
regarding the Company's executive officers:
BIOGRAPHIES OF NOMINEE DIRECTORS AND CONTINUING DIRECTORS
Steve A. Ungerman is Of Counsel to the law firm of Boswell & Kober, P.C.
From August 16, 1997 to December 31, 1997, he was employed by MedSynergies,
Inc., a physician practice management company, in the capacity of Special
Projects. From September 16, 1996 to August 15, 1997, he was President of
MedSynergies, Inc. From September 1996 to December 1997, he was Of Counsel to
the law firm of Ungerman, Sweet & Brousseau. Prior to September 1996, he
practiced law as a shareholder of Ungerman & Ungerman, P.C. and its predecessors
for 28 years in the areas of business matters, commercial finance and mediation.
Mr. Ungerman received his Juris Doctor degree from Southern Methodist
University. He was elected a Director and Chairman of the Board of Directors of
Pizza Inn in September 1990.
Bobby L. Clairday is an Area Developer of Pizza Inn restaurants and he is
President, a Director and sole shareholder of Clairday Food Services, Inc., a
Pizza Inn franchisee operating Pizza Inn restaurants in three states. Mr.
Clairday is also sole shareholder of Advance Food Services, Inc., a franchisee
operating Pizza Inn restaurants in Arkansas. From 1990 until his election as a
Director of the Company in January 1993, Mr. Clairday was an ex-officio member
of the Board of Directors, serving as a representative of our franchisees. He
has served as the President of the Pizza Inn Franchisee Association and as a
member of various committees and associations affiliated with the Pizza Inn
restaurant system. Mr. Clairday has been a franchisee of the Company for over
twenty years.
Ronald W. Parker is Executive Vice President and Chief Operating Officer of
the Company. Mr. Parker joined the Company in October 1992 and was elected
Executive Vice President, Chief Operating Officer and a Director in January
1993. From October 1989 to September 1992, he was Executive Vice President and
General Manager of the Bonanza restaurant division of Metromedia Steakhouses,
Inc. and its predecessor Metsa, Inc. From 1983 to 1989, Mr. Parker served in
several executive positions for USACafes, the franchisor of the Bonanza
restaurant chain.
Ramon D. Phillips has been President, Chief Executive Officer and Chairman
of the Board of Hallmark Financial Services, Inc., a financial services company,
since May 1989. Prior to Hallmark Financial Services, Inc., Mr. Phillips had
over fifteen years experience in the franchise restaurant industry, serving in
an executive position with Kentucky Fried Chicken (1969-1974) and Pizza Inn,
Inc. (1974-1989).
Butler E. Powell is Vice President of Business Banking with Hibernia
National Bank in Metairie, Louisiana. He has served in various capacities with
the bank and its predecessors since 1983. He graduated from Loyola University
in New Orleans with BBA and MBA degrees and spent 3 years with the national
accounting firm, Ernst and Ernst, before entering the banking industry. Mr.
Powell was former President and a Director of the New Orleans Athletic Club and
served on the Foundation Board of East Jefferson Hospital. He was elected a
Director of Pizza Inn in January 1998.
C. Jeffrey Rogers was appointed President of the Company's predecessor in
February 1990 and he became President, Chief Executive Officer and a Director of
the Company in September 1990 pursuant to the terms of the Company's
recapitalization plan. From 1983 to 1989, Mr. Rogers was President, Chief
Executive Officer and a Director of USACafes General Partner, Inc., the general
partner of the limited partnership that owned the Bonanza family restaurant
system and franchised approximately 650 Bonanza restaurants, and its predecessor
USACafes. Mr. Rogers was elected Vice Chairman of the Board of Directors of the
Company in January 1994, and he was elected a Director of Hallmark Financial
Services, Inc. in May 1995.
F. Jay Taylor is an arbitrator in Ruston, Louisiana who is affiliated with
the American Arbitration Association and the Federal Mediation and Conciliation
Service. He is a Director and Chairman of the Audit Committee of Michael's
Stores, Inc. He formerly served as a Director of USACafes, Earth Resources and
Mid South Railroad. Dr. Taylor, who received his Ph.D. from Tulane University,
served as President of Louisiana Tech University from 1962 to 1987 and currently
serves as its President Emeritus. Mr. Taylor was elected a Director of the
Company in 1994.
BIOGRAPHIES OF NON-DIRECTOR OFFICERS
B. Keith Clark joined the Company in February 1997 and was elected General
Counsel and Secretary of the Company in March 1997. From June 1994 through
February 1997, he was Assistant General Counsel and Assistant Secretary of
American Eagle Group, Inc., a property and casualty insurance holding company.
From January 1990 through May 1994, Mr. Clark was a corporate associate in the
Dallas office of Akin, Gump, Strauss, Hauer & Feld, L.L.P., a diversified
international law firm.
Dennis L. Essary was appointed Vice President of Administration/Controller of
Norco Division of the Company in July 1997. In February 1998 he was appointed
Vice President of Norco Operations. He joined the Company as Controller of the
Norco Division in September 1992. Mr. Essary was Vice President of Mediquip
International, a distributor of medical equipment and supplies, from April 1990
to September 1992. Mr. Essary owned a certified public accounting firm from 1987
to 1990.
Bradford S. Lucky was appointed Vice President of Marketing in March 1997. He
joined the Company in December 1996 as Executive Director of Marketing. From
1989 through November 1996, Mr. Lucky served in several account management
positions in the Publicis/Bloom Advertising Agency.
Ward T. Olgreen was appointed Vice President of Concept Development in
February 1999. He joined the Company in September 1991 as a Franchise
Operations Consultant. Mr. Olgreen was promoted to Senior Franchise Operations
Consultant in July 1992, Director of Franchise Operations in July 1993, and Vice
President of International Operations and Vice President of Brand R&D for the
Company in January 1995. Mr. Olgreen was a Branch Manager for GCS Service, Inc.,
a restaurant equipment service provider, from June 1986 through July 1991.
Shawn M. Preator was elected Controller, Treasurer and Assistant Secretary
in April 1999. Mr. Preator had been Assistant Controller at the Company since
July 1998. Prior to joining the Company, Mr. Preator was a Senior Financial
Analyst at LSG/Sky Chefs, an international airline caterer, from September 1996
to July 1998. Prior to September 1996, Mr. Preator worked for the accounting
firm Ernst & Young LLP in their audit department.
Karen A. Steinbach joined the Company in April 1995, and was appointed
Director of Franchise Operations in July 1995. She was appointed Vice President
of Franchise Operations and Training in April 1997. Prior to joining the
Company, Ms. Steinbach was Director of Systems Development at Brice Foods from
1993 through 1995. From 1988 to 1993, Ms. Steinbach served in several positions
at Brice Foods with responsibilities for restaurant and franchise operations.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information, as of October 11, 1999,
with respect to the beneficial ownership of Common Stock by: (a) each person
known to be a beneficial owner of more than five percent of the outstanding
Common Stock; (b) each director, nominee director, and executive officer named
in the section entitled "Summary Compensation Table"; and (c) all directors and
executive officers as a group (13 persons). Except as otherwise indicated, each
of the persons named in the table below is believed by the Company to possess
sole voting and investment power with respect to the shares of Common Stock
beneficially owned by such person. Information as to the beneficial ownership
of Common Stock by directors and executive officers of the Company has been
furnished by the respective directors and executive officers.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board has established Audit, Compensation, Executive, Finance and Stock
Award Plan Committees. The Audit Committee selects independent auditors and
reviews audit results. The Compensation Committee reviews and approves
remuneration for officers of the Company and administers the 1992 Stock Award
Plan. The Finance Committee reviews and oversees the Company's capital structure
and operating results. The Executive Committee considers business as directed
by the Chairman of the Board. The Stock Award Plan Committee administers the
1993 Stock Award Plan and the 1993 Outside Directors Stock Award Plan.
As of October 11, 1999, Messrs. Clairday, Phillips, Taylor and Ungerman
serve on the Audit Committee; Messrs. Phillips, Powell and Ungerman serve on
both the Compensation and Stock Award Plan Committees; Messrs. Phillips, Rogers
and Ungerman serve on the Executive Committee; and Messrs. Parker, Phillips,
Powell and Taylor serve on the Finance Committee.
During fiscal year 1999, the Board of Directors held four meetings. The Audit
Committee met three times, the Compensation Committee met once, the Executive
Committee met eight times and the Finance Committee met four times. In
addition, the Board of Directors and the Compensation and Stock Award Plan
Committees took several actions by unanimous written consent in lieu of
meetings. Each of the directors attended at least three-fourths of the total
number of meetings held by the Board and the committees on which he served.
SUMMARY COMPENSATION TABLE
The following table sets forth the annual compensation of the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company for the fiscal years ended June 27, 1999, June 28, 1998 and June
27, 1997 (designated as years 1999, 1998 and 1997).
(a) Includes: for Mr. Rogers, supplemental retirement benefits of $43,860
(which includes the payment of related taxes) per year in 1999, 1998 and 1997
and life insurance benefits (which includes the payment of related taxes) of
$76,702 in 1999, $86,986 in 1998, and $69,684 in 1997; for Mr. Parker,
supplemental retirement benefits of $43,860 (which includes the payment of
related taxes) per year in 1999, 1998 and 1997 and life insurance benefits
(which includes the payment of related taxes) of $72,139 in 1999, $67,309 in
1998 and $66,965 in 1997; for Mr. Clark, car allowance of $3,600 in 1998 and
$1,200 in 1997; for Ms. Steinbach, car allowance of $3,600 per year in 1998 and
1997; and for Mr. Olgreen, car allowance of $3,600 per year in 1998 and 1997.
(b) Includes compensation for Mr. Clark from his employment date of February
26, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information regarding stock options
exercised during fiscal year 1999 and unexercised stock options held at the end
of fiscal year 1999 by the Chief Executive Officer and the other four most
highly compensated executive officers of the Company. The closing bid price for
the Company's Common Stock, as reported by the National Association of
Securities Dealers Automated Quotation System, was $3.46875 on June 25, 1999 the
last trading day of the Company's fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options granted
during fiscal year 1999, pursuant to the Company's 1993 Stock Award Plan, to the
Chief Executive Officer and the other four most highly compensated executive
officers of the Company.
(a) All of such options were granted on April 16, 1999 and become
exercisable on April 15, 2000.
COMPENSATION COMMITTEE AND STOCK AWARD PLAN COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised of three
independent, non-employee directors. The Compensation Committee is responsible
for establishing the level of compensation of the executive officers of the
Company and administering the 1992 Stock Award Plan. The same three directors
also comprise the Stock Award Plan Committee, which administers the 1993 Stock
Award Plan.
In its administration and periodic review of executive compensation, the
Compensation Committee believes in aligning the interests of the executive
officers with those of the Company's shareholders. To accomplish this, the
Compensation Committee seeks to structure and maintain a compensation program
that is directly and materially linked to operating performance and enhancement
of shareholder value. This has been effectively accomplished in the past by
weighting the compensation of most executive officers in favor of equity
ownership incentives and bonuses paid on the basis of performance.
The Company intends for all compensation paid to its executives to be fully
deductible under federal income tax laws. Recently adopted changes to the
Internal Revenue Code impose certain limitations on compensation in excess of $1
million per year paid to executives. The Compensation Committee believes that
performance based bonuses and stock options granted to its executive officers
will continue to be fully deductible.
CHIEF EXECUTIVE OFFICER
The salary and bonus of C. Jeffrey Rogers, Chief Executive Officer of the
Company, is set forth in his most recent Employment Agreement, effective as of
July 1, 1999. The agreement provides for an annual base salary in fiscal year
2000 of $591,010 which will be increased by 5% per year.
In reviewing Mr. Rogers' agreement, the Compensation Committee found his
base salary and bonus to be in line with the overall leadership he has provided
to the employees and to the franchise community. The bonus program established
in Mr. Rogers' agreement is based on new store openings, pre-tax net income
growth, and pre-tax operating cash flow. Termination provisions were found to
be industry competitive and in line with historical performance and expected
future contributions as well as helping to ensure his continued leadership. See
the section entitled "Executive Employment Contracts."
EXECUTIVE OFFICERS
Salaries of the executive officers, excluding Mr. Rogers, are reviewed
annually and adjusted based on competitive practices, changes in level of
responsibilities and, in certain cases, individual performance measured against
goals. The Compensation Committee strongly believes that maintaining a
competitive salary structure is in the best interest of shareholders. It
believes the Company's long-term success in its marketplace is best achieved
through recruitment and retention of high caliber executives who are among the
most skilled and talented in the industry.
Bonus targets for the four most highly paid executive officers, other than
the Chief Executive Officer, are set annually. Mr. Parker's 1999 bonus was
based on individual performance and targets related to the Company's
profitability, cash flow and debt repayments. The 1999 bonuses for Mr. Clark,
Ms. Steinbach and Mr. Olgreen were based on individual performance and targets
related to profitability of the Company for the fiscal year.
STOCK OPTIONS
The Compensation Committee and Stock Award Plan Committee believe that
equity ownership motivates officers and employees to provide effective
leadership that contributes to the Company's long-term financial success as
measured by appreciation in its stock price. The Company established the 1993
Stock Award Plan for the purpose of aligning employee and shareholder interests.
Under this plan, stock options have been granted in fiscal year 1999 to certain
executive officers, as well as other employees, based upon their relative
positions and responsibilities, as well as historical and expected contributions
to Company growth.
Submitted by the Compensation Committee and Stock Award Plan Committee:
Ramon D. Phillips
Steve A. Ungerman
Butler E. Powell
EXECUTIVE EMPLOYMENT CONTRACTS
C. Jeffrey Rogers and the Company entered into an Employment Agreement,
executed October 1, 1999 and effective as of July 1, 1999, for a term which
currently extends through June 30, 2004.
Under the agreement, Mr. Rogers is also entitled to the following cash
bonuses, based on performance: (a) $37,500 payable each quarter, if the
Company's operating results report pre-tax income growth of at least 10% more
than the same quarter in the preceding year; (b) $75,000 payable each
semi-annual period, if the Company opens at least 50 new Pizza Inn units during
such fiscal year; and (c) $200,000 payable annually, if the Company meets
targets established in the agreement for pre-tax operating cash flow (such bonus
being adjustable to a maximum of $250,000 per year if such targets are exceeded
by certain amounts).
Under the agreement, Mr. Rogers also receives a $50,000 annual allowance to
purchase life and disability insurance and a $10,000 annual allowance to
maintain secondary health, dental and other insurance. As compensation for the
use of his personal automobile on Company business, Mr. Rogers receives $1,350
per month as an automobile allowance, plus reimbursement of gasoline and
maintenance expenses.
Ronald W. Parker and the Company entered into an Employment Agreement,
executed October 1, 1999 and effective as of July 1, 1999, for a term which
currently extends through June 30, 2004. The agreement provides for an annual
base salary and bonus not less than the current base salary and bonus with such
increases as the Compensation Committee may approve.
Mr. Rogers or Mr. Parker may terminate their respective agreements at any time
within six months after a "change in control" of the Company occurs or within
twelve months under certain circumstances after a change in control of the
Company occurs. Change in control is defined as: (a) a transfer of
substantially all of the assets of the Company to an outside group or entity;
(b) the acquisition by an outside group or entity of 50% or more of the stock of
the Company or other surviving corporation; or (c) an unapproved change in the
majority of the Company's Board of Directors. If the Company terminates Mr.
Rogers' employment without cause, or if Mr. Rogers terminates his employment
upon a "change in control," he will be entitled to a lump sum payment of his
base salary for the remainder of the term of the agreement plus two times the
maximum annual bonus amounts provided in the agreement. If the Company
terminates Mr. Parker's employment without cause, or if Mr. Parker terminates
his employment upon a "change in control," he will be entitled to a lump sum
payment of three times (i) his highest annual salary over the last three years
plus (ii) the highest bonus and other cash compensation received by Mr. Parker
the last three years. Each agreement includes a noncompetition covenant that
would apply for three years after termination of employment.
COMPENSATION OF DIRECTORS
A director who is an employee of the Company is not compensated for service
as a member of the Board of Directors or any Committee of the Board. Outside
directors receive an annual fee of $17,000 plus meeting fees equal to $1,000 per
Board meeting and $250 per Committee meeting attended. The Chairman of the
Board receives an additional $6,000 annual fee for serving in that capacity.
Directors are also reimbursed for Board related expenses.
Under the 1993 Outside Directors Stock Award Plan each elected outside
director is eligible to receive, as of the first day of the Company's fiscal
year, options for Common Stock equal to twice the number of shares of Common
Stock purchased during the preceding fiscal year or purchases by exercise of
previously granted options during the first ten days of the current fiscal year.
On the first day of the first fiscal year immediately following the day on which
an outside director first becomes eligible to participate in this plan, that
outside director shall receive an option to acquire one share of Common Stock
for each share of Common Stock owned by such director on this first day of the
fiscal year. No outside director shall be entitled to options for more than
20,000 shares per fiscal year. Stock options granted under the plan have an
exercise price equal to the market price of the Common Stock on the date of
grant and are first exercisable one year after grant.
Since the beginning of fiscal year 1999, stock options were granted to
outside directors pursuant to such plan as follows: on July 1, 1998, options for
5,490 shares (at $5.50) to Mr. Phillips, and 2,500 shares (at $5.50) to Mr.
Powell; on June 28, 1999, options for 10,000 shares (at $3.46875) to Mr. Taylor,
and 2,000 shares (at $3.46875) for Mr. Powell.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during fiscal year 1999 were
Messrs. Powell, Phillips and Ungerman. During fiscal year 1999, C. Jeffrey
Rogers served on the Board of Directors and the Compensation Committee of
Hallmark Financial Services, Inc., of which Mr. Phillips is Chief Executive
Officer and Chairman of the Board of Directors. Prior to 1990, Mr. Phillips
served as a director and officer of two predecessors of the Company. See
"Biographies of Nominee Directors and Continuing Directors."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 6, 1999, the Company loaned C. Jeffrey Rogers, the Company's
President and Chief Executive Officer, approximately $1.95 million to acquire
700,000 shares of the Company's common stock through the exercise of vested
stock options previously granted to him by the Company. The interest rate on
the loan is the same floating interest rate the Company pays in its credit
facility with Wells Fargo (Texas), N. A. ("Wells Fargo"). As collateral for the
loan, Mr. Rogers granted the Company a second lien on 2,749,000 shares of the
Company's common stock and certain real property. The Company has agreed to
subordinate its loan to an existing personal loan made by Wells Fargo to
Mr. Rogers. The Wells Fargo loan is secured by a first lien on the collateral
pledged to the Company.
On October 6, 1999, the Company loaned Ronald W. Parker, the Company's
Executive Vice President and Chief Operating Officer, approximately $560,000 to
acquire 200,000 shares of the Company's common stock through the exercise of
vested stock options previously granted to him by the Company. The interest
rate on the loan is the same floating interest rate the Company pays in its
credit facility with Wells Fargo. As collateral for the loan, Mr. Parker
granted the Company (i) a first lien on 100,000 previously purchased shares
of the Company's common stock and certain real property, and (ii) a second
lien in certain additional real property.
Both loans were approved by the Board of Directors, with the specific terms
and collateral being approved by the Compensation Committee.
Bobby L. Clairday is President and sole shareholder of Clairday Food
Services, Inc. and is sole shareholder of Advance Food Services, Inc., both of
which are franchisees of the Company. Mr. Clairday also holds area development
rights in his own name. Mr. Clairday currently operates 15 restaurants in
Arkansas, Texas and Missouri, either individually or through the corporations
noted above. As franchisees, the two corporations purchase a majority of their
food and other supplies from the Company's distribution division. In fiscal year
1999, purchases by these franchisees made up 5% of the Company's food and supply
sales, and royalties, license fees and area development fees from Mr. Clairday
and such franchisees made up 3% of the Company's franchise revenues.
Ramon D. Phillips is a Vice President and shareholder of Wholesale Software
International, Inc., which is a franchisee operating one Pizza Inn restaurant.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and the persons who own more than ten percent
of the Company's Common Stock to file initial reports of ownership of Common
Stock and reports of changes of ownership with the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc. and to
furnish the Company with copies of such reports. The Company believes that,
during the preceding fiscal year, all of the Company's executive officers,
directors and holders of more than 10% of its Common Stock complied with all
Section 16(a) filing requirements.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative annual total shareholder return
(change in share price plus reinvestment of any dividends) on the Company's
Common Stock versus two indexes for the past five fiscal years. The graph
assumes $100 was invested on the last trading day of the fiscal year ending June
27, 1993. Until fiscal year 1998, the Company did not pay cash dividends on
its Common Stock during the applicable period. The Dow Jones Equity Market
Index is a published broad equity market index. The Dow Jones Entertainment and
Leisure Restaurant Index is compiled by Dow Jones and Company, Inc., and is
comprised of seven public companies, weighted for the market capitalization of
each company, engaged in restaurant or related businesses (CKE Restaurants,
Inc., Brinker International, Inc., Cracker Barrel Old Country Store, Inc.,
Darden Restaurants, Inc., McDonald's Corporation, Tricon Global Restaurants,
Inc., and Wendy's International, Inc.).
INDEPENDENT AUDITORS
The Audit Committee has selected PricewaterhouseCoopers, LLP certified
public accountants, as the independent auditors of the Company for fiscal year
2000. A representative of PricewaterhouseCoopers, LLP will be present at the
Annual Meeting, will be available to respond to appropriate questions, and will
have an opportunity to make a statement.
SHAREHOLDER PROPOSALS
If a shareholder wishes to present a proposal at the Annual Meeting of
Shareholders tentatively scheduled for December 2000, the shareholder must
deliver his or her proposal to the Company at its principal executive offices no
later than July 12, 2000, in such form as required under rules issued by the
Securities and Exchange Commission, in order to have that proposal included in
the proxy materials of the Company for such Annual Meeting of Shareholders.
If a shareholder wishes to present a proposal at the 2000 Annual Meeting of
Shareholders, but does not wish to include the proposal in the proxy materials
of the Company for such Annual Meeting of Shareholders, the shareholder must
notify the Company in writing of his or her intent to make such presentation no
later than September 25, 2000 or the Company shall have the right to exercise
its discretionary voting authority when such proposal is presented at the Annual
Meeting of Shareholders, without including any discussion of that proposal in
the proxy materials for the Annual Meeting.
MISCELLANEOUS
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of preparing, printing and mailing the
proxy and the material used in the solicitation thereof will be borne by the
Company. In addition to the use of the mails, proxies may be solicited by
directors, officers and employees of the Company by personal interview,
telephone or telefax. Arrangements may also be made with brokerage houses and
other custodians, nominees and fiduciaries for the forwarding of solicitation
materials to the beneficial owners of stock held of record by such persons, and
the Company may reimburse them for reasonable out-of-pocket expenses of such
solicitation.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K EXCLUDING EXHIBITS,
DATED SEPTEMBER 23, 1999, IS BEING FURNISHED TO SHAREHOLDERS WITH THIS PROXY
STATEMENT. COPIES OF SUCH EXHIBITS WILL BE FURNISHED UPON WRITTEN REQUEST AND
UPON REIMBURSEMENT OF THE COMPANY'S REASONABLE EXPENSES FOR FURNISHING SUCH
EXHIBITS. REQUESTS SHOULD BE ADDRESSED TO PIZZA INN, INC., 5050 QUORUM DRIVE,
SUITE 500, DALLAS, TEXAS 75240, ATTENTION: CORPORATE SECRETARY.
This Proxy, when properly executed, will be voted by the Proxies in the manner
designated below. If this Proxy is returned signed but without a clear voting
designation, the Proxies will vote FOR Item 1.
Please mark your votes as indicated in this example: [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
Item 1. ELECTION OF CLASS II DIRECTORS.
FOR [ ]
WITHHELD FOR ALL [ ]
Nominees: C. Jeffrey Rogers, F.Jay Taylor and Steve A. Ungerman
WITHHELD FOR: (Write that nominee's name in the space
provided below).
___________________________________________________
If you plan to attend the Annual
Meeting, please mark the WILL
ATTEND block.
WILL
ATTEND
[ ]
Date: , 1999
. Signature
Signature if held jointly
NOTE: Please sign as name appears hereon.
Joint owners should each sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give
full title as such.
FOLD AND DETACH HERE
PROXY
(1) THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PIZZA INN, INC.
5050 QUORUM, SUITE 500
DALLAS, TEXAS 75240
ANNUAL MEETING OF SHAREHOLDERS ON DECEMBER 14, 1999
The undersigned, revoking all proxies heretofore given, hereby appoints C.
Jeffrey Rogers and B. Keith Clark, or either of them, as proxies of the
undersigned, with full power of substitution and resubstitution, to vote on
behalf of the undersigned the shares of Pizza Inn, Inc. (the "Company") which
the undersigned is entitled to vote at the Annual Meeting of Shareholders to be
held at 10:00 a.m., Dallas time on Tuesday, December 14, 1999, at the Company's
training facility, 4819 Keller Springs Road, Addison, TX 75248, and at all
adjournments thereof, as fully as the undersigned would be entitled to vote if
personally present, as specified on the reverse side of this card.